Choo Kyung-ho: "US Interest Rate Hike at Expected Level... Financial Market Uncertainty Still High"

Emergency Macroeconomic and Financial Meeting

(From left) Lee Bok-hyun, Governor of the Financial Supervisory Service; Lee Chang-yong, Governor of the Bank of Korea; Choo Kyung-ho, Deputy Prime Minister for Economy; and Kim Joo-hyun, Chairman of the Financial Services Commission, are attending the Emergency Macroeconomic and Financial Meeting at the Bankers' Hall in Jung-gu, Seoul on the 15th and posing for a commemorative photo. Photo by Ministry of Economy and Finance

[Asia Economy Reporter Seo So-jeong, Sejong=Reporter Son Seon-hee] Choo Kyung-ho, Deputy Prime Minister and Minister of Economy and Finance, evaluated on the 15th that the Federal Reserve (Fed) of the United States raising the benchmark interest rate by 0.50 percentage points "did not significantly deviate from the initial market expectations." However, he emphasized that "financial market uncertainties remain high due to the future direction of inflation and monetary tightening in major countries, and the speed of economic slowdown, so we cannot afford to relax our vigilance even for a moment," pledging to do his best to stabilize the market.

Deputy Prime Minister Choo presided over an emergency macroeconomic and financial meeting at the Bankers' Hall in Jung-gu, Seoul, in the morning and made these remarks. The meeting was attended by financial authorities including Lee Chang-yong, Governor of the Bank of Korea, Kim Ju-hyun, Chairman of the Financial Services Commission, and Lee Bok-hyun, Governor of the Financial Supervisory Service.

The U.S. Fed, after four consecutive giant steps (raising the benchmark interest rate by 0.75 percentage points), lowered the pace of rate hikes to a "big step" in the early morning (Korean time) of that day. Regarding this, Deputy Prime Minister Choo analyzed, "The November U.S. inflation rate recorded 7.1%, lower than the expected 7.3%, marking five consecutive months of slowdown, leading to a moderation in the pace of rate hikes." He added, "However, Fed Chair Powell stated at the press conference that currently, the ultimate level and duration of the rate (how long) are more important than the speed of rate hikes (how fast), and that rate cuts will not be considered until there is confidence in the inflation slowdown."

Regarding the recent domestic financial market situation, Deputy Prime Minister Choo evaluated, "The market is regaining stability due to expectations of a slowdown in the pace of U.S. rate hikes and government market stabilization measures." He cited that the commercial paper (CP) rates have fallen for three consecutive days for the first time since October, and the won-dollar exchange rate, which had surged to the 1,400 won level, recently entered the 1,200 range.

Deputy Prime Minister Choo stated, "The economic and financial teams, including the government and the Bank of Korea, are communicating and cooperating more frequently than ever and sharing information in real time to do their best to stabilize the market," adding, "We are discussing vulnerabilities and response directions in each financial sector to seek the optimal policy mix."

He continued, "To support corporate financing, the bond market stabilization fund totaling 20 trillion won plans to complete a second capital call of 5 trillion won by January next year," and said, "Starting early next year, we will actively support smooth corporate bond issuance by fully launching a 5 trillion won primary collateralized bond obligation (P-CBO) program." Additionally, to support liquidity for financial institutions, he added, "Along with liquidity support for securities companies through Korea Securities Finance (3 trillion won), the Bank of Korea's repurchase agreement (RP) purchases and expansion of eligible collateral securities for loans will ensure no disruption in liquidity supply to companies by financial institutions."

Regarding real estate finance, he said, "Following the additional expansion of the real estate project financing (PF) operator guarantee scale by 5 trillion won (from 10 to 15 trillion won), a 5 trillion won supply of unsold PF loan guarantees will also be immediately provided from January 1 next year."

This content was produced with the assistance of AI translation services.